Dubai: UAE employees are unlikely to face any major salary changes in 2021, although a recent survey has revealed that new hires can expect a two per cent reduction than their previous counterparts.
In a report published by Cooper Fitch, which specialises in recruitment, executive search and human resources advisory services, 200 UAE-based companies were analysed and found that 65 per cent of firms made no change to mid-level and senior salaries in 2020. The report also indicated that 14 per cent of firms said they had reduced mid-level wages, compared to 12 per cent for executive hires.
“The survey shows that, for the majority of organisations based in the UAE, significant salary increases are unlikely in 2021 as the market recovers from the effects of COVID-19. However, as business continues to accelerate in the new year recruitment activity could follow suit, as companies seek to position themselves for renewed growth,” read the report.
The key findings further pointed out that while 67 per cent of companies did not have any redundancies in 2020, 30 per cent said they had.
“At the same time, almost a third, 30 per cent, said they had made redundancies, with 15 per cent reporting that this affected 1-9 per cent of employees, 9 per cent saying it affected 10-20 per cent of staff, and two per cent citing between 21-30 per cent,” according to Cooper Fitch’s UAE Salary Guide for 2021.
In the final quarter of 2020, 62 per cent said business activity was either busy or had to started to pick up, while 34 per cent of firms said they had implemented a hiring freeze during the year.
As of December 2020, 28 per cent of firms said they were recruiting for placement positions only, while the Salary Guide report showed that 45 per cent had yet to decide whether to implement a merit pay rise for staff in 2021. The majority of respondents, at 68 per cent, said they either did not know if they would pay this year’s bonuses or said that they expected not to. An additional 33 per cent said there would not be any change to existing salaries in 2021, indicating a pay freeze.
2021 outlook
Advisory, technology and public sector companies were the least likely to have made redundancies.
“At the same time, almost a third, 30 per cent, said they had made redundancies, with 15 per cent reporting that this affected 1-9 per cent of employees, 9 per cent saying it affected 10-20 per cent of staff, and two per cent citing between 21-30 per cent,” according to Cooper Fitch’s UAE Salary Guide for 2021.
Trefor Murphy, chief executive officer and founder of Cooper Fitch, said: “Almost half of the firms have yet to decide about increments for their staff in 2021 while a significant 41 per cent were undecided or didn’t yet know. Around nine per cent said they had delayed pay rises, while 30 per cent said they had decided to implement a merit salary increase, with advisory and financial services the best-performing sectors in this regard.”
The survey added that 13 per cent of firms would increase mid-level salaries by up to five per cent while 17 per cent said they would continue a salary freeze.
